Although the novel coronavirus pandemic is causing continued global and economic uncertainty, there is a silver lining. The economic disruption COVID-19 has caused has triggered mortgage rates to become volatile, with Australia’s lowest ever recorded interest rates recorded now on offer. Refinancing your home loan while interest rates are low can save Australian homeowners big bucks by reducing your monthly repayments. Depending on your strategy and situation, refinancing during the corona crash may even help you make money.
The COVID-19 crisis has seen home loan rates drop to figures not seen since the end of World War II. In mid-March, the Reserve Bank dropped the official cash rate to 0.25 — the first time a non-scheduled slash has been implemented in 23 years. The big four banks have all passed this on, with fixed-rate home loans now available for just above two per cent variable rates hovering around 2.8 per cent. Analysts believe this is fairly close to “rock bottom” — opening up new opportunities for homeowners to reduce their monthly repayments.
In 2020, refinancing accounts for approximately 70 per cent of mortgage applications, with this rate more than double as compared to recent years according to data from AlphaBeta. Refinancing now while the market is disrupted and interest rates low is a great option for some, however, eligibility criteria are also tightening during the crisis. Although lenders are eager to get low-risk customers on board, determining whether or not you qualify for refinancing can be like trying to navigate a maze while blindfolded. Lenders analyse several factors that contribute to your financial health such as job security, credit scores and the accumulated equity on your existing loan. If your financial position has been impacted minimally by the coronavirus outbreak, refinancing may be an ideal option for you.
While there’s no crystal ball to predict when the timing is right, there is an easy and stress-free way to determine whether refinancing might be a good move considering your circumstances. Madd Loans offers a free and easy Home Loan review. With access to over twenty lenders, chatting to a Madd Loans broker can be the first and last step you need to take refinancing your home loan.
Madd Loans can also help discern which lender is the perfect fit for you. There’s no need to go rushing off to your closest major bank, with the lowest ongoing variable rates often coming from smaller lenders such as mutual banks and credit unions. Although renegotiating with your current lender may yield some results, refinancing with a new lender can often result in the best possible home loan rate, as lenders compete to acquire new customers. This intensified competition between banks does not only affect your home loan rate but the features that are included with your refinanced loan. These features can offer homeowners more flexibility and help save a significant amount of money, reducing the loan term and the total interest you pay. Navigating these features and deciphering their meaning is something our team at Madd Loans can assist you with as well.
Even those who have been significantly impacted by COVID-19 may still be eligible. As long as you have a lot of your loan paid off, have a low LVR (loan-value ratio) and are still working now may be an ideal time. Madd Loans can help you crunch the numbers, allowing you to make an informed decision about refinancing your home loan during the COVID-19 crisis.